Amid the COVID-driven chaos of 2020, an increasing number of financial advisors have been starting to question whether the “big firm” model is right for them. “Independence” sure sounds good— no one looking over your shoulder, no pressure to sell proprietary products.

But being an independent advisor isn’t for everyone, and the regrets that can come with going independent for the wrong reasons or without a fully formed plan can be severe. So before taking the leap, we recommend taking time to ask yourself a few basic questions and think hard about the answers:

Do you want to be an entrepreneur?
We all read about the successful entrepreneurs. Our country and culture puts on a pedestal those hard-charging individuals who took control of their professional lives, and who now live the dream.

The reality is often less glamorous. There are challenges to being on your own that you don’t face as part of a larger organization. Every big decision lands on your desk—personnel, technology, investment products and strategies, even where and for how long you’ll lease office space. (And these days, who comes to that office and when, who works from home, etc.) If someone is up in the middle of the night worrying about the business, it’s you. If a person in the organization has to make sacrifices, you’re at the top of the list.

But for many, that responsibility is exactly what they’re looking for in going independent. They want to shape their business and their team, they want to challenge themselves, and they want to make the choices that can help them better serve their clients. They’re willing to make the tough calls and accept the responsibility for the consequences knowing that when it all works, they are making a positive difference in the lives of the families and individuals they work with and that they’re building something for the future that they can call their own.

Is it all about the money?
Money is important, and most of us could always use a little more. It’s also a great motivator. Money has been described as “the residue of labor” and that’s true. You need to make money. Your firm needs to be profitable. You need to generate the cash flow to reinvest in people and in technology. But the desire to make more money is not by itself sufficient to guarantee a successful independent practice. It helps to have a higher purpose.

For those of us in the financial advice business, that purpose generally revolves around our clients. We succeed when the client succeeds, and the rewards follow, not the other way around. Clients have goals and they have challenges. Their life circumstances evolve—sometimes dramatically—over the years. Helping them face and surmount those changes is what most of us find satisfying. People first or profits first? The honest answer to that question can go a long way in helping you decide whether independence is right for you.

Will I have the technology to support my clients?
This is a foundational issue. Yes, providing financial guidance is ultimately about building and maintaining client relationships. But technology is a crucial linchpin in that process. Client expectations are changing as the world around us changes.

Providing a digital experience for clients can be expensive. Clients have certain baseline expectations for the frequency and quality of contact. Those expectations are likely to grow and change as the younger demographic becomes a bigger part of your practice. At some point, you may work with someone who has never walked into a bank, for example, and who rarely meets with you face-to-face (even when face-to-face meetings once again become the norm). You have to be prepared for that eventuality by putting in place the ability to communicate across multiple channels and platforms.

As you look down the road, decisions made about technology early on will have lasting repercussions for your business. Surveys have shown that the bigger the firm the higher the priority they put on investing in technology. This creates efficiency, allowing the business to grow, while maintaining a personal touch and meeting (or exceeding) the expectations of your clients.

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